The Computer & Communications Industry Association turns 40 in 2012 and I've been the President & CEO since 1995. After working for both the Commerce and State Department, I chaired and am a current member of the State Department's advisory committee on communications and information freedom. At CCIA we advocate for open markets, open networks and broad policies in Washington that allow, or at least don't block, the next generation of tech entrepreneurs from building on past innovation and bringing their latest product or service out of the garage or dorm room and into the marketplace.

How Getting Internet Provisions Right In TPP Trade Talks Could Boost Economy For All

President Obama’s senior trade officials are in San Diego this week for negotiations on the deal being billed as the 21st Century Trade Agreement – the Trans-Pacific Partnership. The administration is touting this Partnership between the U.S., Australia and seven other countries as a model for future negotiations on trade in everything from industrial goods to Internet services. For the U.S., the Internet sector is a major export industry. And so a big question going into the San Diego round of talks is whether and how hard the U.S. negotiators will push for Internet-friendly provisions, and how they will respond to push back from special interests or other countries.

The U.S. government is under pressure by some, including many in Hollywood, not to support language that’s good for the Internet. But early this week USTR proposed some key copyright language that emphasizes the importance of limitations and exceptions (such as “fair use” in the U.S.) that industries, which represent one-sixth of the U.S. GDP, depend on. Previous trade deals like the flawed Anti-Counterfeiting Trade Agreement would have exported the intellectual property enforcement provisions of the U.S. Digital Millennium Copyright Act minus the kind of limitations and exceptions that have allowed US companies to flourish. That’s problematic — just ask British Prime Minister David Cameron. To put this in perspective, copyright limitations and exceptions allow search engines to link to websites, prevent Facebook from having to prescreen everyone’s wall posts and are vital to the existence of thousands of Internet companies.

CCIA’s 2011 economic study on fair use found the Internet industry is not alone in depending on balanced copyright; industries relying upon the various balancing provisions in U.S. copyright law (“fair use industries”) produce revenue of $4.7 trillion, generating $2.2 trillion in “value added” to the U.S. economy. Fully 17.5 million people – 1 in 8 U.S. workers – are employed by industries that depend upon balanced copyright.

Another point to watch is how other countries respond to Internet-friendly language. Other countries may still be working in the 20th-century trade paradigm that trade proposals are a zero-sum game – ie. whatever the U.S. gets hurts their domestic industry. Indeed, it used to be that trade talks were thought of as a carefully negotiated set of trade offs. For example, a negotiator may say, “I’ll let your farmers compete with my farmers if you let my steel guys compete with your steel guys.” Both countries have something to lose (jobs in uncompetitive industries) but the result is a net win (open markets and greater efficiency).

But the Internet works more dynamically. Improved Internet services are like the rising tide that lifts all boats – and these efficiency gains are available to everyone. You don’t have to be an Internet company to use online payments, webmail, and e-commerce. In fact, developing countries have more to gain relative to developed countries because a healthy and accessible Internet ecosystem is a shortcut to the more traditional trade links to foreign markets. In the 21st century, you don’t have to be a massive multinational corporation to sell your wares or provide services around the world, you just need access to the Internet and the ability to use e-commerce platforms and cloud computing services.

The proposed “Internet friendly” language in the TPP agreement is good for US Internet industries, but it is also good for the domestic industries of our trading partners. A healthy Internet ecosystem is an enabler of growth across borders. According to the McKinsey Global Institute, three-quarters of the benefits of the Internet accrue to traditional industries in expanding their markets and making them more efficient. More specifically, the Internet has led to a 10% increase in productivity for small and medium- sized businesses.

If the TPP is really going to set the gold standard for 21st century trade agreements, it must correctly address the issues pertinent to the most dynamic element of the 21st century economy. Giving Internet services the following three basic protections in trade agreements will help the domestic industries of all our trading partners.

* Free flow of information – Government efforts to disrupt the free flow of information should be characterized as barriers to trade, and must be addressed in trade agreements. This means rules must protect e-commerce, limit ISP liability, and stop Internet censorship. As one minimum benchmark, U.S. policy should commit to the blueprint established in the Korea-U.S. Free Trade Agreement, under which parties refrain from unnecessary barriers to cross-border information flows.

* Limitations on liability (don’t kill the messenger) – Intellectual property law should not inhibit legitimate commerce. Trade agreements need provisions to protect innovators and Internet users from “secondary liability” — being held legally responsible for misconduct of others who happen to use their service or website. Disharmony in international law currently results in businesses and users around the world facing liability for new business models, product features and activities that are necessary for an open Internet and are permitted under U.S. law.

* IP rules that “get” the 21st Century We need to make sure IP rules don’t stymie Internet services and 21st century business models like search, webmail, cloud computing, and e-commerce platforms. Search engines and social networks rely on balanced copyright in order to index the web to help users communicate and find information. Disproportionate IP penalties have led to decreased investment in new innovations online such as cloud computing. As for e-commerce, US trade negotiators should fight for the inclusion of the first sale doctrine into the TPP as a means of protecting and expanding market access for small and medium-sized businesses.

A 21st century agreement will require throwing out a lot of the 20th century misconceptions on both sides of the Pacific. It’s no small task, but if we can get over that hurdle it can grow the pie for everyone.

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